BAE Systems, the leading U.K. defense-and-aerospace group, anticipates another year of strong sales and earnings growth, along with robust cashflow generation. This positive outlook is driven by heightened geopolitical risk, as well as a steady order flow on both new and existing programs.
Strong Order Book and Growth Prospects
BAE Systems has already secured over £30 billion ($36.68 billion) worth of orders this year. These orders include approximately $800 million for Bradley fighting vehicles used by the U.S. Army, along with upgrades. Moreover, there is around $500 million allocated for Sweden's Archer artillery system and $797 million to commence full-rate production of the armored multi-purpose vehicle for the U.S. Army.
"The high order flow reflects continued customer confidence in our ability to deliver important capabilities at a time of heightening geopolitical risk," states the company.
Increased Sales Growth Guidance
In August, the board revised its sales growth guidance, raising it to a range of 5% to 7%, up from the previous range of 3% to 5%. BAE Systems aims to achieve good top-line growth in the forthcoming years. The sales in 2022 reached £23.26 billion.
Positive Projections for Earnings and Cash Flow
Baed on their updated guidance, the company projects underlying earnings before interest and taxes to rise between 6% and 8%, while free cash flow is expected to decline to £1.8 billion from the £1.95 billion recorded in 2022. BAE Systems reported underlying EBIT of £2.48 billion last year.
Long-Term Visibility and Growth Opportunities
BAE Systems highlights that most of its major defense programs function in the long term, encompassing both the build and support phases. Consequently, contracts secured by the company will be executed over several years, providing long-term visibility for top-line growth.
These positive developments have translated into a 0.6% increase in the company's shares, trading at 1,110 pence as of 0934 GMT.
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